Atari said no to Donkey Kong!

[SoundGammon]

I was watching a story on Prime about Atari and a part came on where an executive at Warner asked Ray Kasser as to why he didn't get the license to Donkey Kong.

 

His reponse was: "Nintendo wanted $2.00 per copy of each of the game sold!"  The executive said: "So? We would still have made a lot of money on that!"

 

So Coleco got it!

[ZippyRedPlumber]

Oh Ray... you fool...

 

[Jason_Atari]

What year did Atari get the rights to re-release it in the red label era?

[zzip]

17 hours ago, SoundGammon said:

His reponse was: "Nintendo wanted $2.00 per copy of each of the game sold!"  The executive said: "So? We would still have made a lot of money on that!"

What's the normal rate?

 

I'm sure consumers would have paid an extra dollar or so for  Donkey Kong

[CapitanClassic]

2 hours ago, zzip said:

What's the normal rate?

 

I'm sure consumers would have paid an extra dollar or so for  Donkey Kong

That is an important question. According to Wikipedia/ InfoWorld

Quote

InfoWorld Nov 28, 1983
By 1982, the 2600 cost Atari about $40 to make and was sold for an average of $125 (equivalent to $350 in 2021). The company spent $4.50 to $6 to manufacture each cartridge, plus $1 to $2 for advertising, wholesaling for $18.95 (equivalent to $50 in 2021).

So their costs would have gone from $4.50 + $2 = $6.50 for a cart that sales for $18.95 (65% margin) to $8.50 (55% margin).

 

From Nintendo’s point of view, they had a hit on their hands, and figured they should get a bigger cut of the $10-$12 profit per cart. From Atari’s point of view, anyone could make a cart (  ), Nintendo is no different than Purina Dog Food / Colgate. The same thinking cost them all that potential money from the developers that left for Activision. The programmers didn’t want to make someone else rich without a better cut, but some companies/people are too stupid for their own good.

 

(Reminds me of an Adam Carolla story.

He offered to make an audio version of his 2nd or 3rd book for his publisher after the original audio book did so well. As with the previous release, they would split the profits and costs 50%/50%, potential making somewhere in the high $10k/$100k. Previously, the publisher had to rent a recording studio, and hire an engineer, and they would split the costs (about $5,000, with half going to the studio and half to the engineer). But, since Adam has a podcast and built his own recording studio and had his own audio engineers, he suggested that he would provide the recording studio and they would just have to pay the audio engineer for his time ($2,500). 

 

They refused, saying he should have to pay half the cost of the engineers time as well. He countered that he was already providing the cost of the recording studio, which if they weren’t going to use it, they would have to rent one and incur additional costs together, but they wouldn’t budge. Since he has F-me-money*, he decided on principle not to make the audio book, and he eventually dropped the publisher. The publisher didn’t want to pay the “extra” $1250, with the potential of making 40 times as much.)
 

*F-me-money: Enough money to not care about your own money screwing yourself over when someone has wronged you 

*F-you-money: Enough money to not care about their money when telling someone to screw-off when they have wronged you.

[orange808]

I suspect large retailers were able to negotiate lower prices for carts. Atari was probably willing to go down a bit--and I bet they did.

 

Sears, in particular, should have had significant leverage and negotiating power with Atari--and I imagine their relationship benefitted Sears handsomely. I also don't know how Atari accounted for the risk of the remarkable guarantees they provided to retailers. So, I think the Wikipedia gross profit estimate sounds too high--and we (also) don't know how they valued their risk. Atari had to make some big sacrifices to get their products into stores.

 

We also don't know about internal conversations. I know Atari management wasn't particularly good at bridging the business/accounting/advert team with the creative team, but they still communicated. If devs had been asked about Donkey Kong, the responses may not have been encouraging. If someone at Atari had been thinking about making a port and already started something promising, it may have gone down differently.

 

 

[zzip]

25 minutes ago, CapitanClassic said:

So their costs would have gone from $4.50 + $2 = $6.50 for a cart that sales for $18.95 (65% margin) to $8.50 (55% margin).

Well not quite because there were a bunch of other arcade conversions there were presumably getting some royalty rate.   ($1?  0.50?)   So it wouldn't be $2 extra for DK, it might only be $1 extra

 

And the retail price of videogame carts varied widely back then.   ($19.99, 24.99, 29.99 and higher).   So if the DK license was a little more expensive I think Atari could have easily passed the added cost onto consumers.    Demand would have been high enough.

 

I think part of the problem was that Ray Kassar came from textiles and viewed videogames as a commodity...  they are all the same and interchangeable as were the designers who made them.   That's why he didn't want to give the developers credit,  that's an absurd ask for a commodity product.

[CMR]

Ray was ahead of his time.  People laugh that he wanted people to buy extra copies of ET for their ski lodges, but Nintendo has been selling the same games across multiple consoles to people for years now. 

[SoundGammon]

13 hours ago, zzip said:

Well not quite because there were a bunch of other arcade conversions there were presumably getting some royalty rate.   ($1?  0.50?)   So it wouldn't be $2 extra for DK, it might only be $1 extra

 

And the retail price of videogame carts varied widely back then.   ($19.99, 24.99, 29.99 and higher).   So if the DK license was a little more expensive I think Atari could have easily passed the added cost onto consumers.    Demand would have been high enough.

 

I think part of the problem was that Ray Kassar came from textiles and viewed videogames as a commodity...  they are all the same and interchangeable as were the designers who made them.   That's why he didn't want to give the developers credit,  that's an absurd ask for a commodity product.

Good thing Ray wasn't in charge of a music-artist company! Treat The Beatles like a commodity and not put their individual names on the albums? Obviously Ray couldn't distinguish between a mop and an artist!

[zzip]

On 4/30/2022 at 3:17 AM, SoundGammon said:

Good thing Ray wasn't in charge of a music-artist company! Treat The Beatles like a commodity and not put their individual names on the albums? Obviously Ray couldn't distinguish between a mop and an artist!

And it's not like Warner had no experience running music labels or movie studios.   They should have known better!

Edited May 2, 2022 by zzip

[Goochman]

Ray was clueless in the Electronics arena - as long as he got his private catered dining and Rolls Royce chauffeured then all was good.  The computer side was smaller and not as profitable, so lets get the license for that instead....................

[Steverd]

But Atari did release Donkey Kong in July 1981 and Colecovision was 1982.
So Atari must've paid something for the rights?

 

Maybe they only paid HALF since the game only had 2 of the 4 level - ? -

 

[zzip]

15 minutes ago, Steverd said:

But Atari did release Donkey Kong in July 1981 and Colecovision was 1982.
So Atari must've paid something for the rights?

 

Maybe they only paid HALF since the game only had 2 of the 4 level - ? -

 

The Donkey Kong arcade game came out in July 1981,  Coleco released the 2600 Donkey Kong in 1982 and Atari released their 8-bit computer version in 1983